Mechanics Lien

Definition

A charge against real estate for the value of work or materials incorporated thereon.

Purpose

A mechanics lien provides security to contractors, subcontractors, and material suppliers by ensuring they receive payment for their services and materials. It allows them to claim a legal interest in the property if they are not paid, potentially leading to foreclosure to recover the owed amount.

Examples of Use

• Construction projects: Contractors filing a lien to secure payment for completed work.
• Material suppliers: Placing a lien on property to ensure payment for delivered materials.
• Subcontractors: Protecting their financial interests when working under a general contractor.

Related Terms

• Lien: A legal right or interest that a creditor has in the debtor's property.
• Foreclosure: The process of taking possession of a mortgaged property as a result of the owner's failure to keep up with payments.
• Bond: A financial guarantee that a contractor will complete a project and pay all subcontractors and suppliers.

Notes

• Mechanics liens must be filed within a specific time frame, which varies by jurisdiction.
• Proper documentation and adherence to legal procedures are essential for successfully filing a mechanics lien.
• Mechanics liens can complicate property sales and financing, as the lien must be resolved before transferring clear title.